Evraz Plc · LSE:EVR
Evraz — H1 2013 Earnings Presentation
35 slides from Evraz's earnings presentation, Aug 29, 2013
Slide 1: H1 2013 Financial Results
H1 2013 Financial Results 29 August 2013
Slide 2: Disclaimer
Disclaimer This document does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of EVRAZ plc (“EVRAZ”) or any of its subsidiaries in any jurisdiction (including, without limitation, EVRAZ Group S.A.)
Slide 3: Highlights
Highlights Overview of H1 2013 Results Liquidity and Financial Position Segmental and Geographical Results Capex and Investment Projects Summary H1 2013 Financial Results 2
Slide 4: Overview of H1 2013 Results
Overview of H1 2013 Results
Slide 5: HSE Performance
HSE Performance Safety remains a key priority Lost Time Injury Frequency Rate (LTIFR)* 10 fatalities recorded in H1 2013 2.05 2.06 Slips, trips and falls are the principal causes of injuries recorded in H1 2013 Actions: New safety standard for walkways has been developed that will be compr
Slide 6: H1 2013 summary
H1 2013 summary US$ million unless otherwise stated H1 2013 H1 2012 Change Revenue 7,362 7,619 (3)% EBITDA* 939 1,184 (21)% EBITDA margin 12.8% 15.5% (2.6)% Net loss (122) (46) n.a. Operating cash flow 628 1,089 (42)% Capex 492 565 (13)% Cash and short-term deposits 1,563 2,064 (24)% Free cash flow
Slide 7: H1 2013 financial highlights
H1 2013 financial highlights Consolidated revenue decreased primarily due to Consolidated revenue by segment, $m lower sales prices, in line with general trends in the 7,619 7,362 global steel industry 541 263 465 268 H1 2013 EBITDA reflects lower prices of steel 1,383 1,622 Other operations pro
Slide 8: Cost of revenue
Cost of revenue In H1 2013 cost of revenue decreased by 2% Consolidated cost of revenues by cost elements, $m vs. H1 2012 despite consolidation of Raspadskaya H1 % of H1 % of Relative Raw material costs declined by 20% and Item 2013 revenue 2012 revenue change depreciation by 19%, but were parti
Slide 9: H1 2013 FCF generation
H1 2013 FCF generation Cash flows from operating activities after changes in working capital fell by 42.3% in H1 2013 to U$628m reflecting lower product prices compared to H1 2012 Investment in working capital was due to seasonality of our business As a result, there was a free cash outflow fo
Slide 10: Liquidity and Financial Position
Liquidity and Financial Position
Slide 11: H1 2013 debt bridge and net leverage
H1 2013 debt bridge and net leverage In H1 2013 net debt increased mostly due to the consolidation of Raspadskaya US$ million Cash Deposits 8,606 8,440 Collateral under swaps 8,248 Total Debt 572 87 8 192 0 Net Debt 7,043 6,184 6,376 Net debt on Adjustments to Debt on 31/12/12 Free cash flow Excha
Slide 12: Liquidity and debt maturity profile
Liquidity and debt maturity profile Maintenance covenant non-compliance risk has been pro-actively managed: Outstanding balance on the $950m structured credit facility containing maintenance covenant was prepaid Waivers were received for the next two testing periods in respect of outstanding b
Slide 13: Segmental and Geographical Results
Segmental and Geographical Results
Slide 14: Steel: CIS
Steel: CIS Our Russian steelmaking facilities continued to operate Steel products sales volumes: CIS vs. export, kt at close to full capacity during H1 2013 5,586 5,633 Construction industry remains the key driver of demand for steel products in CIS, demonstrating healthy growth 33% 34% of 13.1%
Slide 15: Steel consumption in Russia
Steel consumption in Russia Long steel consumption has reached pre-crisis level Demand is being driven by infrastructure development projects announced by the government and robust residential construction Demand from the construction sector is close to an all-time high EVRAZ is one of the b
Slide 16: Steel: North America
Steel: North America Strong production performance in tubular and construction & other steel products Flat product group focused on enhancement of capacity utilisation Tubular product group concentrated on improving productivity rates at the seamless mill at Pueblo and on heat treating investm
Slide 17: Mining: iron ore
Mining: iron ore External sales volumes of iron ore products increased by Iron ore products sales volumes excluding Mapochs*, kt 6.5% in H1 2013 compared to H1 2012 driven by higher volumes from EVRAZ Sukha Balka Intersegment sales decreased by 6.0% primarily due to 9,336 9,025 changes to inters
Slide 18: Mining: coking and steam coal
Mining: coking and steam coal External sales volumes of coal products increased in H1 Coking coal products sales volumes, kt 2013 by 350% due to additional 2 million tonnes of coking coal concentrate from Raspadskaya and higher 6,348 sales of steam coal products Raspadskaya In H1 2013 ca. 68% of
Slide 19: Performance by regions
Performance by regions EBITDA, EVRAZ Russia, $m EBITDA, EVRAZ North America, $m 1,052 882 216 81 H1 2012 H1 2013 H1 2012 H1 2013 EBITDA, EVRAZ Ukraine, $m EBITDA, EVRAZ Europe, $m EBITDA, EVRAZ South Africa, $m 40 21 16 6 (3) (6) H1 2012 H1 2013 H1 2012 H1 2013 H1 2012 H1 2013 * H1 2012 numbers are
Slide 20: Capex and Investment Projects
Capex and Investment Projects
Slide 21: Capex
Capex Delivering on major investment programme: Rail mill modernisation at EVRAZ ZSMK completed in January 2013 and currently being ramped-up Commissioned new coking coal mine Yerunakovskaya VIII with the capacity of 2.5 Mtpa Introduced a PCI technology at EVRAZ NTMK Significantly increase
Slide 22: Key investment projects
Key investment projects Cumulative Estimated Total capex by Capex in capex in capex*, 30/06/2013*, H1 2013, H2 2013, Project $m $m $m $m Project targets Completed 975 832 84 70 Yerunakovskaya VIII mine Production of up to 2.5 Mtpa of coking coal 310 221 43 36 construction Ramp-up to be completed
Slide 23: Summary
Summary
Slide 24: Summary
Summary H1 2013 sales volumes were broadly flat, while H1 2013 financial results reflected weaker steel price environment Lower prices were partially offset by decrease in costs especially in raw materials Delivered on several major investment projects – rail mill modernisation, commissioning
Slide 25: Appendix
Appendix
Slide 26: EVRAZ's Global Business
EVRAZ’s Global Business Global Vertically Integrated Steel, Mining and Vanadium Business with Strong Positions in Highly Attractive Markets 158 Russia/CIS 1,334 338 3,706 500 Europe 115 393 1,551 North America Asia 266 South America Africa Steel mills Steel Sales Volume Breakdown (H1 2013) Iron ore
Slide 27: Steel products: sales by market
Steel products: sales by market kt $m H1 2012 3,324 3,240 H1 2013 2,604 2,421 1,732 1,555 1,582 1,345 1,349 1,367 1,068 838 840 632 492 529 406 466 275 305 336 351 214 224 Russia Americas Asia Europe CIS Africa & Russia Americas Asia Europe CIS Africa & RoW RoW H1 2013 Financial Results 26
Slide 28: Steel: Europe, South Africa
Steel: Europe, South Africa Steel products revenues, $m Steel products sales volumes: European operations, kt 543 519 38 39 Revenue, Revenue per tonne, $m $ Other Products H1 2012 H1 2013 H1 2012 H1 2013 European Operations 505 480 Flat-rolled Flat-rolled 398 329 788 686 Other 37 36 974 923 TOTAL 43
Slide 29: Vanadium
Vanadium Vanadium segment revenues increased by 1.9% to Ferrovanadium prices (FeV), $/kg contained V $268m in H1 2013 compared to $263m in H1 2012 reflecting increase in sales prices of vanadium products, which offset the decrease in sales 31.15 31.0 volumes 31.6 27.80 Sales volumes decreased by
Slide 30: Cost structure by segment
Cost structure by segment Cost structure of Steel segment, % of segment revenue Cost structure of Mining segment, % of segment revenue Revenue: 7,019 6,416 Revenue: 1,383 1,622 CoR: 5,742 5,245 Other CoR: 1,175 1,321 Energy 82% 82% 85% Depreciation 81% 12% 12% Staff costs 16% Other 7% 7% 19% 3% 3% T
Slide 31: EBITDA
EBITDA US$ million Consolidated EBITDA reconciliation 30 June 2013 30 June 2012 Profit from operations 183 439 Add: Depreciation, depletion and amortisation 562 668 Impairment of assets 7 80 Loss on disposal of property, plant & equipment 10 25 Foreign exchange (gain) loss 177 (28) Consolidated EBIT
Slide 32: Free cash flow
Free cash flow US$ million Free cash flow calculation 30 June 2013 EBITDA 939 Changes in working capital (150) Income tax paid (126) Other (35) Cash flows from operating activities 628 Net interest and similar payments (273) Capital expenditures (492) Short-term deposits of acquiree (at the date of
Slide 33: Total debt
Total debt US$ million Total debt calculation 30 June 2013 31 December 2012 (US$ million) Long-term loans, net of current portion 6,750 6,373 Short-term loans and current portion of long-term loans 1,453 1,783 Add back: Unamortised debt issue costs 78 116 Nominal effect of cross-currency swaps on pr
Slide 34: Net debt
Net debt US$ million Net debt calculation 30 June 2013 31 December 2012 Total Debt 8,606 8,440 Short-term bank deposits (0) (674) Cash and cash equivalents (1,471) (1,320) Cash of assets classified as held for sale (66) (70) Collateral under swaps (26) - Net Debt under new approach 7,043 6,376 Nomin
Slide 35: Contact
London +44 207 832 8990 Moscow +7 495 232 1370 [email protected] www.evraz.com 29 August 2013